What to Watch: Is Big Jobs Miss Priced In?

Main focus on Jan employment data this morning, key metric for anticipating tighter policy from the Fed. Ebb and flow this week --

• Median estimates have receded to +125k since Wed's large ADP private employ miss of -301k (+180k est), market chatter of much lower: zero job gains to a loss of -250k (GS).
• Thu's 25bp rate hike from the BoE (4 out of 9 members wanted +50bp) and hawkish messaging from ECB rekindled bets on larger/faster hikes in US FI. Current tug-of-war in short end has Mar'22 Eurodollar futures still pricing in small chance of 50bp hike (see 0725ET bullet) while Jun'22 futures near fully pricing in 50bp move.
• Curve effect on a big miss: opinions vary. Knee-jerk reaction is bull steepening under premise tighter policy cools. Bull steepening likely to be fleeting as a miss already priced in some desks say. "We know labor is tight despite NFP survey during peak omicron," one desk said while others add markets will look past the data to next week's inflation numbers (CPI 0.5% est, 7.3% YoY)
  • US Data/Speaker Calendar (prior, estimate)
  • Feb-4 0830 Jan Non-Farm Payrolls (+199k, +125k)
  • Feb-4 0830 Change in Private Payrolls (+211k, +33k)
  • Feb-4 0830 Unemployment Rate (3.9%, 3.9%)
  • Feb-4 0830 Average Hourly Earnings MoM (0.6%, 0.5%); YoY (4.7%, 5.2%)
  • Feb-4 0830 Labor Force Participation Rate (61.9%, 61.9%)